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  Budget

Budget Questions and Answers

 

Note: Answers marked New reflect the most current information as of June 1, 2009. If you have additional questions, please email them to bartindalebecky@fhda.edu.

Please go to the Budget Survey page and let us know if this information was helpful.

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BUDGET
Q-B1. What is the amount of the district’s operating deficit?
Q-B2. What makes the district think we may have a bigger operating deficit for 2009-10 than the $9.2 million the district is currently projecting?
Q-B3. How will the measures on the May 19 special election ballot affect our budget?
Q-B4. What will we do if our operating deficit grows substantially beyond the current estimate of $9.2 million in 2009-10?
Q-B5. What happens when our one-time funds run out?
Q-B6. Why does the district need to make structural changes to address the operating deficit?
Q-B7. How have salaries and benefits increased compared to cost-of-living adjustments?
Q-B8. What has the district done to bring down its health care costs?
Q-B9. What else is the district doing to reduce expenses?
Q-B10. Can we use bond money to close the deficit?
Q-B11. With all these uncertainties, when will we know how bad our situation is and how many layoffs we will need?
Q-B12. How can I get more information about what is happening at the colleges and Central Services?
Q-B13. When money is tight, why are we moving to develop an educational site at the NASA Research Park?
Q-B14. What if our state funding is cut so much that we can no longer serve all the students who want to attend Foothill and De Anza?
Q-B15. What should we expect now that the ballot measures have failed and the governor has released his May budget revisions? New
Q-B16. Will federal stimulus funding help improve the budget picture for community colleges? New

PERSONNEL
Q-P1. Why is the district planning to eliminate positions?
Q-P2. Can the district close the budget gap by eliminating only vacant positions?
Q-P3. When will we know which positions are being proposed for elimination?
Q-P4. When would layoffs take place?
Q-P5. Is it possible we will have to cut more than 76 positions?
Q-P6. Are there ways to reduce the number of eliminated positions?
Q-P7. Could we cut costs by offering employees retirement or other separation incentives?
Q-P8. Why is the district still hiring when we are planning for reductions in staff?
Q-P9. If I am in an eliminated position, does that mean I will be laid off?
Q-P10. How does “bumping” work?
Q-P11. Will people who are at risk of losing positions be considered when vacancies are being filled?
QP-12. What is the district doing to help employees who may be laid off?
Q-P13. If my position is eliminated could I get my job back if the position is later restored?
Q-P14. If I am laid off, how long can I keep my health benefits?
Q-P15. Why are more classified and administrative positions than faculty positions usually eliminated at times like these? Q-P16. Does the district still think it can delay layoffs until the end of the 2009-10 fiscal year now that it has seen the governor’s May budget revision? New

COMPENSATION
Q-C1. Why is the district asking employees to take cuts in pay and benefits? New
Q-C2. How much rollback in salary and benefits is the district talking about? New
Q-C3. Would it solve the district’s budget problem if employee groups agreed to meet the district’s compensation reduction targets? New
Q-C4. Could the district guarantee no additional personnel reductions if employee groups agree to cuts in salary and benefits? New
Q-C5. If I take a reduction in pay or benefits, or work fewer days, would that affect my retirement benefits? New
Q-C6. How can I get more information about how the district’s salary and benefits proposals would affect me? New

BUDGET

Q-B1. What is the amount of the district’s operating deficit?

A. As of May 1, we estimate the deficit is $9.2 million for 2009-10. That means we expect to have $9.2 million more in operating expenses than revenues (income). The district also expects to run a deficit for 2010-11. The combined deficit for those two budget years is projected to be at least $11.9 million. The district’s deficit could grow even larger, particularly if the state further reduces funding to community colleges. (May 1, 2009) Return to top

Q-B2. What makes the district think we may have a bigger operating deficit for 2009-10 than the $9.2 million the district is currently projecting?

A. The district’s revenue (income) assumptions for 2009-10 are based on a budget plan that was approved by the Legislature and signed by the governor in February. Since then, there have been indications that several important state and local revenue sources may not materialize as planned:

• Foothill-De Anza faces a potential additional revenue loss estimated at $9.3 million if voters do not approve the six statewide measures on California’s May 19 special election ballot, according to the Community College League of California.

• The independent state legislative analyst predicted in March that state revenues will fall $8 billion short of projections because of lower-than-expected tax collections. If California’s 2009-10 budget is billions of dollars out of balance, that could mean additional state funding reductions for community colleges.

• Santa Clara County is reassessing the value of about half the properties in the county because of declining property values. This could lead to significantly lower property tax collections. The district’s $9.2 million projected budget deficit assumes a drop in property-tax revenues, but the decline may be larger than we estimated and we may not receive backfill money from the state to make up the lost revenue.

If all these circumstances come to pass, the district could face an operating deficit of $24 million to $27 million over the next two fiscal years, instead of the $11.9 million two-year deficit we have projected. While these things may not occur, the numbers underscore the point that our budget problem could get worse before it gets better. (May 1, 2009) Return to top

Q-B3. How will the measures on the May 19 special election ballot affect our budget?

A. Some $6 billion to balance the state budget hangs in the balance of the election's outcome. The six measures on the ballot were part of a budget compromise by the California Legislature and the governor to address a record $42 billion state deficit over 18 months. The budget plan relies on new revenue, spending cuts, borrowing and reforms that include placing restraints on state funding and establishing a “rainy day” fund for use in future budget crises.

Passage of the measures would bring new funding to education, including community colleges, to help catch back up from recent state funding reductions. Failure to pass the measures would send legislators back to the drawing board for a new budget plan. An analysis by the Community College League of California projects $9.3 million in additional state funding reductions for Foothill-De Anza in 2009-10 if voters reject the ballot measures. (May 1, 2009) Return to top

Q-B4. What will we do if our operating deficit grows substantially beyond the current estimate of $9.2 million in 2009-10?

A. Our first step would be to use available one-time funds to address any additional state funding reductions. (May 1, 2009) Return to top

Q-B5. What happens when our one-time funds run out?

Unfortunately, recent projections suggest we will have largely exhausted the available one-time funds by the end of the 2009-10, if not earlier. Once these one-time dollars are gone, the district is planning to move forward with additional ongoing structural changes to reduce our operating costs. Without one-time funds, each dollar increase in expenses will require a reduction in some other expense to balance the budget. (May 1, 2009) Return to top

Q-B6. Why does the district need to make structural changes to address the operating deficit?

A. Fundamentally, it is because salaries and benefits are increasing far beyond the cost-of-living adjustments (COLAs) we have received from the state.

The district did not receive any COLA from the state in the current fiscal year, and does not expect to receive any state COLA for 2009-10 or 2010-11 as California faces its own budget crisis. As a result, the district is using one-time dollars to cover increases in salaries and benefits, and to delay layoffs. This is not sustainable into the future. (May 1, 2009) Return to top

Q-B7. How have salaries and benefits increased compared to cost-of-living adjustments?

A. Between 1992-93 and 2007-2008, the cumulative salaries for employee groups significantly exceeded cost-of-living adjustments from the state. Cumulative salary increases for the vast majority of district employees (FA, SEIU and CSEA) over those 15 years exceeded the state COLAs the district received by 11 percent to 12 percent.

Health benefit costs (medical, dental and vision) for active and retired employees have increased by 77 percent between 2001-02 and 2008-09, from $16.7 million to $29.5 million. The district estimates that the cost of health benefits for 2008-09 and 2009-10, combined, will increase by at least $6 million, with no state COLAs to offset that. By all indications, this trend of cost increases will continue into 2010-11. (May 1, 2009) Return to top

Q-B8. What has the district done to bring down its health care costs?

A. Health care costs are the No. 1 contributor to the operating deficit.

The district already has taken steps to reduce its spending on medical benefits. It has negotiated with vendors to reduce costs, negotiated with bargaining units to eliminate dual coverage when both members of a couple are employed by the district, and eliminated a district subsidy for dependents under the PPO+ program, starting in 2009-10.

Foothill-De Anza’s deficit projection for 2010-11 assumes that the district will not contribute to any additional increases in health benefits costs. (May 1, 2009) Return to top

Q-B9. What else is the district doing to reduce expenses?

A. Hiring has almost stopped, most vacancies are not being filled and we have cut back on travel and conference spending. Where appropriate, we are moving positions that have been funded through the district’s general fund into categorical or grant-funded budgets.

Some reorganization efforts are under way. The colleges are reviewing whether some instructional and student services programs could be combined to save money. To help us live within our means, the campuses are conducting reviews to determine if they should discontinue some instructional programs that no longer attract enough students or do not align closely with our mission and goals. Similarly, the district and Central Services are reviewing operational costs to identify additional savings. (May 1, 2009) Return to top

Q-B10. Can we use bond money to close the deficit?

A. Bond money cannot be legally used to pay for general operating costs. Bond money is intended to fund capital projects and the cost of professionals who execute those projects, as approved by district voters. (May 1, 2009) Return to top

Q-B11. With all these uncertainties, when will we know how bad our situation is and how many layoffs we will need?

A. We should know more about whether community colleges are likely to suffer additional state funding reductions after the May 19 special election and the governor’s May budget revision. With the state almost certainly facing a larger-than-expected deficit for 2009-10, it may take months for the Legislature to come up with a new budget plan.

Despite the uncertainties, the district will need to plan based on the most current information we have and be prepared to adjust as new information becomes available. (May 1, 2009) Return to top

Q-B12. How can I get more information about what is happening at the colleges and Central Services?

A. Both campuses and Central Services are holding meetings to discuss the budget and have established budget web sites:

Foothill College Budget News
De Anza College Budget Advisory
District Budget Update

Q-B13. When money is tight, why are we moving to develop an educational site at the NASA Research Park?

Strategic planning for the future has been a hallmark of Foothill-De Anza since its founding in 1957. Despite the state’s financial crisis, we must find a way to serve more students who are seeking higher education. NASA presents us with an opportunity to conceive and build high-quality educational facilities in partnership with the University of California-Santa Cruz, Santa Clara University and Carnegie Mellon University to serve students in a part of Silicon Valley that has been underserved by higher education.

The district anticipates much of the NASA development will be paid for with private financing. The academic institutions in the partnership are working to secure a master developer who can attract the external capital investment needed to complete the project.

In 2009, Foothill-De Anza’s funding obligation for the project is estimated at $220,000. This obligation will be met from two sources: Measure C bond proceeds will pay for the professional services of planners, architects, engineers and environmental specialists, at an estimated cost of $140,000. Administrative costs are estimated at $80,000 and cannot be funded through Measure C. Those costs will be met from a source other than the district’s general fund, which pays for salaries and benefits. (May 14, 2009) Return to top

Q-B14. What if our state funding is cut so much that we can no longer serve all the students who want to attend Foothill and De Anza?

A. If California’s budget situation continues to deteriorate, one approach being discussed is for the entire California Community Colleges system to serve fewer students. This would be similar to what CSU and UC have done by limiting enrollments. Some 50,000 students are now being educated in California’s 100 community colleges for whom the colleges receive no funding, according to the state chancellor’s office. (May 14, 2009) Return to top

Q-B15. What should we expect now that the ballot measures have failed and the governor has released his May budget revisions?

A. We do not have definitive or reassuring answers except to say that legislators will have to go back to the drawing board to balance the budget. In the May budget revision, the governor proposed cutting community college funding by an estimated $700 million in 2009-10. The Community College League of California advises that a “best-case” scenario would be $500 million in cuts to community colleges as a result of strong political advocacy. For Foothill-De Anza, these possibilities would mean funding reductions of $15 million to $21 million on an operating budget of approximately $186 million. (June 1, 2009) Return to top

Q-B16. Will federal stimulus funding help improve the budget picture for community colleges?

A. The state’s current plans apparently do not include any federal stimulus funds for community colleges, according to reports out of Sacramento. That could change as a result of the political process, but is not something we can count on. While the federal stimulus dollars will help the state address some of its budget shortfall, stimulus dollars are only one-time funds, not a permanent or ongoing solution for the state. (June 1, 2009) Return to top

PERSONNEL

Q-P1. Why is the district planning to eliminate positions?

A. The district is looking at all possible options for reducing expenses. Our efforts to make substantial cuts to operating costs in other ways, such as the district’s request to employee groups to help reduce health benefits costs, so far have met with limited success.

The district’s biggest expense is personnel costs. Salaries and benefits account for 84 percent of the operating budget. The district has few choices but to eliminate positions to balance the budget. (May 1, 2009) Return to top

Q-P2. Can the district close the budget gap by eliminating only vacant positions?

A. Even if we eliminated every vacant position, we do not expect to have enough vacancies in 2009-10 to close an operating deficit of $9.2 million or more. In addition, some vacant positions are critical and will need to be refilled.

Eliminating some vacant positions will help, though. Currently, the district plans to eliminate 22 vacant positions, including nine faculty positions, one administrative position and 12 classified positions. As new positions become vacant in the months ahead, the campuses and Central Services will carefully evaluate whether the jobs need to be filled.

The district will have to hire a limited number of people for vacancies because of our internal needs and state requirements. For example, the state requires the district to maintain a minimum number of full-time faculty in relation to enrollment size, or face a financial penalty. We will hire some faculty to avoid being fined. (May 1, 2009) Return to top

Q-P3. When will we know which positions are being proposed for elimination?

A. The district’s budget reduction plan for 2009-10, which was emailed to everyone on Feb. 25, called for eliminating at least 76 positions (22 vacant positions and 54 filled positions) and expressed a goal of delaying layoffs until 2010-11, allowing time to plan ahead and find alternatives. The positions are being identified in preparation for the first reading of the district’s 2009-10 tentative budget before the Board of Trustees on June 1.

Employees who are in positions identified for elimination will be informed during the week of May 11. We are still discussing how to communicate more widely about this. (May 1, 2009) Return to top

Q-P4. When would layoffs take place?

A. We hope to have enough one-time funds to delay layoffs until June 30, 2010 (the end of the 2009-10 fiscal year). If the state makes additional reductions in funding to community colleges in 2009-10, we may have to begin the layoff process and let people go sooner, perhaps as early as January 2010. (May 1, 2009) Return to top

Q-P5. Is it possible we will have to cut more than 76 positions?

A. It is possible we may need to eliminate more than the 76 positions identified in the budget reduction plan for 2009-10, particularly if the state further reduces our funding. Since the district presented its budget reduction plan two months ago, new information and projections show our operating deficit for 2009-10 will be at least several million dollars larger than we had projected. Given California’s weak economy, the governor may call for additional funding reductions for community colleges in his May budget revision to the state’s 2009-10 budget plan. (May 1, 2009) Return to top

Q-P6. Are there ways to reduce the number of eliminated positions?

A. Although we plan to move forward with identifying positions for elimination in the 2009-10 budget, our plan is to use one-time funds to delay laying people off for as long as we can. That buys us time to look at other money-savings options.

Discussions about alternatives to layoffs already have begun. Through the collective bargaining process, the district is asking all employees groups to agree to salary and benefit reductions to help reduce the number of layoffs that will be needed.

The district began a conversation with employee groups about the need for salary and benefit reductions in November 2008. We were able to reach agreement on a limited number of small changes in medical benefits, but they fell far short of the cost-cutting the district needs to make to achieve a balanced budget. (May 1, 2009) Return to top

Q-P7. Could we cut costs by offering employees retirement or other separation incentives?

A. This is not something the district is considering at this time for several reasons. The last time we did this, a later review showed that the incentives program did not save money.

In addition, the district wants to preserve as many people and positions as possible to serve students. By having the campuses and Central Services go through the process of program review to determine which positions to eliminate, we are forced to decide which positions we can no longer afford to fund. An incentives approach often leads to the departure of individuals who later need to be replaced, resulting in no permanent savings. We need to achieve savings that are permanent and structural. (May 1, 2009) Return to top

Q-P8. Why is the district still hiring when we are planning for reductions in staff?

A. Very little hiring has taken place since the fall quarter 2008. However, we will occasionally need to fill positions that are considered essential to the operation of the colleges and district or are necessary to meet government regulations. One example is the state mandate that community colleges employ a minimum number of full-time faculty relative to the size of enrollment, or face financial penalties. The district’s goal is to stay one full-time faculty position over the minimum, and we would fill any vacancies that would take us below that number.

The chancellor’s staff and Board of Trustees are closely scrutinizing each hiring recommendation (May 1, 2009) Return to top

Q-P9. If I am in an eliminated position, does that mean I will be laid off?

A. Who is laid off from employment will depend on seniority and the availability of vacant positions. An employee whose position is eliminated can assert seniority rights and “bump” into a vacant position or, if no vacant position is available, into a position held by an employee with the least seniority. Bumping is provided for in all the district’s collective bargaining agreements.

Retirements and resignations that occur over the coming months are likely to create some opportunities for job movement and alternatives to layoff. The district will use available one-time funds to delay layoffs as long as possible to preserve people and positions. (May 14, 2009) Return to top

Q-P10. How does “bumping” work?

A. A more senior person can bump within the same employment classification, or a different classification to which the employee holds seniority rights. Establishing seniority rights is a complex and time-consuming process. Dorene Novotny, vice chancellor of human resources and equal opportunity, said that because of the number of positions affected, it will take several months to establish the effects of seniority and bumping rights. In addition, we will not know about our state funding until the summer or fall. That information also will influence how many individuals will be affected. (May 14, 2009) Return to top

Q-P11. Will people who are at risk of losing positions be considered when vacancies are being filled?

A. We will evaluate every opportunity to place employees into vacant positions. Several people who were previously advised that their positions were or may be at risk already have moved voluntarily into vacant positions that needed to be filled. However, there will be times when no one in the layoff pool has the skills to successfully fill a vacancy. The district will negotiate with employee bargaining units to develop a process for filling vacant positions. (May 14, 2009) Return to top

Q-P12. What is the district doing to help employees who may be laid off?

A. At a minimum, we will offer job search support, counseling and help with resume writing and interviewing skills to help people find employment. In addition, we are working on a transition plan to assist employees who move into other positions as a result of position elimination. (May 14, 2009) Return to top

Q-P13. If my position is eliminated could I get my job back if the position is later restored?

A. If a position is eliminated and later restored, the district first will look to re-employment lists and other contractual provisions for offering laid-off workers a chance to return to work. (May 14, 2009) Return to top

Q-P14. If I am laid off, how long can I keep my health benefits?

A. Coverage ceases at the end of the month in which the separation occurs. Anyone who loses health coverage as the result of being laid off can continue coverage under COBRA insurance for up to 18 months. By contractual agreement, the district will pay for the first three months of COBRA coverage for the employee and all dependents who were receiving health coverage through the district at the time of separation. (May 14, 2009) Return to top

Q-P15. Why are more classified and administrative positions than faculty positions usually eliminated at times like these?

A. Having enough faculty to serve our students is essential to our mission and to maintain our state funding, which is based on enrollment. In addition, California requires community colleges to maintain a minimum number of full-time faculty in relation to the number of students served.

Foothill-De Anza’s minimum is 516 full-time faculty positions. Currently, the district has 527 full-time faculty positions, or 11 positions over the minimum. For 2009-10, our goal is to have 517 positions, one over the minimum, to provide a small cushion. If the district dropped below the minimum number, it would face a fine of $60,000 for each position it was short.

It is important to note that part-time faculty are often the first to be affected in times of budget crisis. When the district cut course sections this year to reduce costs, a number of part-time instructors were not re-employed. (May 14, 2009) Return to top

Q-P16. Does the district still think it can delay layoffs until the end of the 2009-10 fiscal year now that it has seen the governor’s May budget revision?

A. That is still our goal, but the one-time funding the district has available to delay layoffs likely will be depleted earlier than we had anticipated if Foothill-De Anza loses $15 million to $21 million in state funding as is now being projected. We will give people as much advance notice as possible, but may need to implement personnel reductions sooner than we had hoped. (June 1, 2009) Return to top

COMPENSATION

Q-C1. Why is the district asking employees to take cuts in pay and benefits?

A. Since salaries and benefits account for about 84 percent of our operating budget, there are few other ways we can significantly cut costs. Given the anticipated gap between our revenues and expenses and the governor’s proposed state funding reductions for 2009-10, we must reduce personnel costs in the absence of new sources of revenue. We can do this by cutting the costs of salaries and benefits through employee concessions (give backs) or by reducing the number of employees, or a combination of those two.

The district’s top priority is serving students. To serve students, we need to preserve as many positions and people as possible. (June 1, 2009) Return to top

Q-C2. How much rollback in salary and benefits is the district talking about?

A. The district presented a compensation proposal at the bargaining table last week. One element, which would apply to all employee groups, is capping the monthly amount the district contributes to health benefits for each employee. The district proposed a “defined contribution” for benefits of $972 per employee per month. The proposed cap is roughly equivalent, on average, to the district’s monthly contribution for each employee in 2006-07, which is the last year the district did not have a revenue shortfall.

The district also has proposed a 10 percent across-the-board reduction in salaries. (June 1, 2009) Return to top

Q-C3. Would it solve the district’s budget problem if employee groups agreed to meet the district’s compensation reduction targets?

A. Capping health benefits as the district has proposed and rolling back salaries by 10 percent would save about $18.8 million in 2009-10.

Whether that resolves the budget problem would depend on how severe the state funding cuts turn out to be and what our expenses are in 2009-10. Based on the governor’s budget proposal, we estimate that the district would face state cuts of $15 million to $21 million in 2009-10, on top of the $3 million to $4 million in unresolved operating deficit we are projecting for 2009-10. So currently the best information we have suggests the district’s gap between revenue and expenses for 2009-10 could total $18 million to $19 million on the low end and $24 million to $25 million on the high end. (June 1, 2009) Return to top

Q-C4. Could the district guarantee no additional personnel reductions if employee groups agree to cuts in salary and benefits?

A. Given the uncertainty of the financial situation, the district cannot make guarantees about future actions. We are in the midst of an unprecedented financial crisis and do not know yet whether the situation will get worse before it gets better. At the same time, please know that we are making every effort to protect people and positions so we can continue to serve students to the best of our ability. (June 1, 2009) Return to top

Q-C5. If I take a reduction in pay or benefits, or work fewer days, would that affect my retirement benefits?

A. Changes in pay or work assignment could influence future retirement benefits. For example, your highest rate of pay would remain the same based on your employment history, but your ability to increase your pay rate may be delayed until future years. Calculations affecting retirement formulas are complicated and specific to each employee’s retirement plan and employment history. Employees may obtain more specific information by contacting their retirement plan representatives. (June 1, 2009) Return to top

Q-C6. How can I get more information about how the district’s salary and benefits proposals would affect me?

A. Individuals with questions may contact any of the following:
Bargaining Unit Representatives
• FA - Anne Paye at payeanne@fhda.edu or 650.949.7074
• ACE - Blanche Monary at monaryblanche@deanza.edu or 408-864-5705
• CSEA - Leo Contreras at contrerasleo@fhda.edu or 650-949-6151
• Teamsters - George Robles at roblesgeorge@deanza.edu or 408-864-8952
• Operating Engineers - J.R. Dorcak at dorcakjr@fhda.edu or 650-949-7313
Meet and Confer Group representatives
• Confidential Employees - Mia Casey at caseymia@foothill.edu or 650-949-7408
• AMA - Jeri Montgomery at montgomeryjeri@deanza.edu or 408-864-8417
Human Resources Director Kim Chief Elk (chiefelkkim@fhda.edu, 650-949-6109)
Vice Chancellor Dorene Novotny (novotnydorene@fhda.edu, 650-949-6210).

The district will continue sharing information about the budget situation at meetings on the campuses and in Central Services, and on the budget update web page. (June 1, 2009) Return to top

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Last Updated: Thursday, June 4, 2009 at 7:39:15 AM
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